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A personal loan agreement is a legal contract between a lender and a borrower for lending money. Lenders can be banks, credit entities, or individuals, and the contract is legally binding. Unlike standard loans tied to specific uses, such as student loans or mortgages, personal loans offer more flexibility in how funds can be spent. They are often unsecured, meaning they are not tied to assets like homes or cars, though some may require collateral, which should be defined in the contract. Essential elements in a personal loan include the names and addresses of both parties, signatures, the state of execution, the contract date, and the total loan amount.
